Redbox Sues Fox Over DVD Delay

NEW YORK Redbox Automated Retail has filed suit against 20th Century Fox Home Entertainment over the studio’s decision to impose a 30-day delay on making its new DVD releases available to the rental kiosk company.

Fox thus becomes the second studio targeted by Redbox in a lawsuit. Universal Studios Home Entertainment last year was sued after withholding its new DVD releases from Redbox by 45 days.

Redbox president Mitch Lowe, in a statement, intimated that while the suit works its way through the courts, the kiosk company would simply buy Fox DVDs at retail and rent them as soon as they come out, just as the company currently does with Universal Studios releases.

“Redbox’s cornerstone principles include providing customers with a convenient way to rent new release DVDs at an affordable price,” Lowe said. “At the expense of consumers, 20th Century Fox is attempting to prohibit timely consumer access to its new release DVDs at Redbox retail locations nationwide.”

He insisted, “Despite this attempt, Redbox will continue to provide our consumers access to all major new releases, including 20th Century Fox titles, at our more than 15,000 Redbox DVD rental locations.”

Fox last week announced the new policy with the statement, “We invest enormous money, creativity and effort into making entertaining, high-quality Fox movies available throughout the world,” implying that buck-a-night kiosk rentals devalues the studio’s intellectual property.

Studios have become increasingly alarmed over Redbox kiosks in recent months, as DVD sales continue to trend downward while the rental business, powered in large part by kiosks, surges. Midyear numbers provided by Rentrak indicate consumer spending on video rentals rose 8.3 percent in the first six months of this year compared to the same period in 2008.

Studio executives fear the proliferation of Redbox kiosks is cannibalizing DVD sales, particularly since those kiosks are now being rolled out nationwide in the lobbies of Walmart stores. Walmart has traditionally been the country’s No. 1 retail seller of DVDs.

Studios are split into two camps: Those that are fighting Redbox, which they compare to a dollar movie house that shouldn’t get first-run features, and those that are cutting deals with the kiosk company to minimize any potential damage to their bottom lines.

Fox and Universal belong in the former category, while Sony Pictures and Lionsgate have each cut deals with Redbox to provide new releases to the kiosk company for immediate rental, with the stipulation that those DVDs are not to be resold later on the used-disc market once rental demand dies down. Studio executives have long cited the sale of “previously viewed” rental DVDs as another culprit in sagging DVD sales.

Nielsen Business Media